Halliburton execs point to U.S. shale as profits leap 70 percent

Published 9:48 am, Friday, October 24, 2014

Halliburton CEO Dave Lesar talks with the media after an annual shareholders meeting.

Halliburton CEO Dave Lesar talks with the media after an annual shareholders meeting.

Photo: Melissa Phillip/Houston Chronicle File PHoto

Halliburton execs point to U.S. shale as profits leap 70 percent

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HOUSTON — U.S. shale plays have become laboratories for experiments with more production stages, more sand and, in West Texas, a lot more horizontal rigs — a development Halliburton executives say has required an unprecedented level of oil-field service intensity.

That’s largely why Houston-based Halliburton, the oil field service company with the largest U.S. fleet of hydraulic fracturing equipment, posted a 70 percent boost in profit in the third quarter, the company reported Monday.

The U.S. horizontal rig count had grown 20 percent over last year, while the number of production stages used in oil wells was up more than 30 percent and the average amount of sand used in hydraulic fracturing jobs increased more than 50 percent, Halliburton president Jeff Miller said in a conference call with investors Monday.

“While the rising rig count was predominantly a Permian Basin phenomenon, our customers are experimenting with larger completion volumes in almost every basin,” Miller said. “This is a fundamental change in well design that we believe is part of a continuing trend.”

Halliburton banked a profit of $1.2 billion, or $1.42 a share, in the July-September period, compared to $706 million, or 79 cents a share, in the same period last year. Revenues increased from $7.5 billion to $8.7 billion.

Much of the rise in profits came from its North American division and its post-drilling oil well completion business, but Halliburton CEO Dave Lesar acknowledged that problems getting sand to U.S. fracturing sites caused the company and its rivals to “miss some jobs.” He said that prompted Halliburton to take some extra steps.

Miller said Halliburton more than doubled its sand-storage capacity at shale play terminal, got on track to double its rail car fleet to haul sand from northern mines, and has cut 30 new deals with suppliers so far this year. Halliburton, Miller said, also recently started up a sand-logistics command center in Houston to monitor sand supply levels in U.S. basins and track its rail and trucking fleets in real time.

Halliburton’s earnings on Monday followed last week’s reports from oil field rivals Schlumberger and Baker Hughes, which both posted double-digit profit increases and noted strong demand for oil well completion services, like hydraulic fracturing, in North America.

Lesar said service intensity rose to unprecedented levels. North America contributed most to the income boost for Halliburton’s completion and production business, climbing from $489 million to $765 million. Halliburton’s North American drilling income fell from $168 million to $141 million.

Income in Latin America fell 11 percent. Earnings from Europe and Africa increased 7.5 percent, while Halliburton’s Middle Eastern income grew from $200 million to $262 million, largely because of a resurgence of activity in Saudi Arabia, Oman and Angola.

Halliburton also said it would increase its quarterly dividend by 3 cents a share, to 18 cents a share.

Sliding oil prices have loomed large over the U.S. shale bonanza in recent months, but Miller said Halliburton doesn’t expect any the price decline to affect the long-term outlook of oil company spending, the central income source of oil field service companies.

“Budgets are moving up, not down,” Miller said. “Everything I see looks like it’s increasing in 2015.”